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Saudi Arabia: SAGIA to Become an Independent Ministry

Saudi Arabia: SAGIA to Become an Independent Ministry
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Saudi Arabia: SAGIA to Become an Independent Ministry

Saudi Arabia: SAGIA to Become an Independent Ministry

Transforming the Saudi General Investment Authority (SAGIA) into an independent ministry represents a fundamental shift in the national economy.

Such a move would diversify production and attract qualitative investments, according to an economist and member of the Saudi Shura Council.

Saudi Arabia announced Tuesday that SAGIA will become the Ministry of Investment, led by former Energy Minister Khalid al-Falih.

Shura member Saeed al-Sheikh told Asharq Al-Awsat that the decision to convert SAGIA into a ministry is important, strategic, and in line with the directions of Vision 2030. It will give the Authority additional powers enjoyed by ministries to increase its effectiveness in attracting local and international investments.

Sheikh believes that there is an urgent need for horizontal diversification in light of the information boom and the fourth industrial revolution, pointing out that transforming the authority into a ministry aims to attract more qualitative investments that achieve high added value and also create job opportunities. 

In addition, the investment sector will be separated from the Ministry of Commerce in a step that confirms the seriousness of the Saudi objective to diversify the economy, involve the private sector in development, and attract more investments that add value to the national economy.

The step also comes within the framework of promoting the government’s performance and pushing it to achieve the goals and initiatives of Vision 2030.

Vision 2030 is based on three axes: A prosperous economy, an ambitious state, and a vibrant society, in order for Saudi Arabia to be a pioneer in investment.

SAGIA sought to attract and enable qualitative investments for sustainable development, as the authority worked to monitor and evaluate the performance of investments and overcome difficulties faced by investors. It has carried out studies, and presented and proposed implementation plans with a view to promoting investments within Saudi Arabia.

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China Approves $840B Plan to Refinance Local Government Debt, Boost Economy

Visitors walk past a shop under construction with a dragon mural at the Sanlitun shopping district in Beijing, Friday, Nov. 8, 2024. (AP Photo/Ng Han Guan)
Visitors walk past a shop under construction with a dragon mural at the Sanlitun shopping district in Beijing, Friday, Nov. 8, 2024. (AP Photo/Ng Han Guan)
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China Approves $840B Plan to Refinance Local Government Debt, Boost Economy

Visitors walk past a shop under construction with a dragon mural at the Sanlitun shopping district in Beijing, Friday, Nov. 8, 2024. (AP Photo/Ng Han Guan)
Visitors walk past a shop under construction with a dragon mural at the Sanlitun shopping district in Beijing, Friday, Nov. 8, 2024. (AP Photo/Ng Han Guan)

China on Friday approved a 6 trillion yuan ($839 billion) plan to help local governments refinance their mountains of debt, in the latest push to rev up growth in the world’s second largest economy.

The plan will be implemented over the next three years, Xu Hongcai, vice-chairman of the National People's Congress's financial and economic committee, said at a news conference Friday.

Finance minister Lan Fo'an estimated that the hidden debt of local governments was 14.3 trillion yuan ($2 trillion) at the end of 2023. Hidden debt refers to debt that has not been disclosed publicly, The Associated Press reported.

Lan said 2 trillion yuan would be allocated each year from 2024 to 2026 to help local governments resolve their debts. He estimated that the amount of hidden debt will drop to 2.3 trillion yuan ($320.9 billion) by the end of 2028.

Officials also said Friday that the ceiling to issue special bonds will be raised to 35.52 trillion yuan ($4.96 billion) from 29.52 trillion yuan ($4.12 billion) for local governments.

Lan said that the implementation of such a large-scale replacement measure indicates a “fundamental shift” in China's approach to debt restructuring and said that China’s government debt risk was “controllable.”

Analysts have called for bold, multi-trillion-yuan measures to reinvigorate the world's second largest economy, which has yet to bounce back fully from the COVID-19 pandemic.
Local government debts have ballooned partly due to high spending and low tax revenues during the pandemic, but also due to a downturn in the property industry, since sales of land use rights, a key source of local government revenue, have sagged.

The central bank loosened restrictions on borrowing in late September, sparking a stock market rally, but economists say the government needs to do more to ignite a sustained recovery. Government officials have indicated that could come at this week's meeting of the Standing Committee of the National People's Congress, which must give official approval to any new spending.

The economy has shown signs of life in the past two months. Purchase subsidies offered to people who trade in old cars or appliances for new ones helped auto sales rebound in September. A survey of manufacturers turned positive in October after five straight months of decline, and exports surged 12.7% last month, the largest increase in more than two years.

For most of the year, the ruling Communist Party appeared more focused on addressing long-term structural issues with the economy rather than short-term ones. Previous steps to boost the economy were piecemeal, seemingly aimed at keeping the economy afloat rather than sparking a robust recovery.

In recent weeks, the party has signaled a growing concern about the economy's sluggishness as it tries to meet its goal of achieving growth of around 5% this year. The central bank's monetary easing was followed by government pronouncements that it still has ample funds to pump into the economy.

Still, the longer-term goals of transforming China into a high-tech and green energy economy seem likely to remain the chief aims of the Communist Party, which doesn't face election pressures like the ones that toppled the Democrats and swept Donald Trump's Republicans to power in America this week.